Many shop owners believe that the commodity section of their business is the most important use of their time to create net profit. Do the math and test it out.

If you take all the parts you sold last year and achieved another 10% off in your cost, you may perceive that was effort well spent. But what if you took the same time and focused on improving the productivity of the shop by 10%, what do you find then? The math will prove that the majority of shop owners are so focused on getting a better price for their parts, they missed the incredible opportunities that would change their business life.

Take these steps:

Calculate how much additional gross profit you would make if you got another 10% off on your parts purchases from the last 12 months

Now calculate the average billed hours per repair order you achieved over the last 12 months

Take that average billed hour number and multiply it by 10%

Take that number and multiply it by your current maintenance door rate.

Now take that answer and multiply it by the total number of repair orders you wrote last year.

Now compare the parts GP you would have obtained in #1 to the increased billed hour dollar number you would have obtained if your focus was on productivity improvement.

If you did it right I believe the improved billed hour number and the dollars it would have brought in forced you stop and check your numbers as you don’t believe it. Math does not lie.

Focus your time on what matters most to the business net profit improvement. Without net income, the business cannot move forward.

Bob Greenwood

Business Management & Training Mail List

Keep Up To Date with The Latest HD & Automotive Industry Management News. Sign up Today!